Lr.No.M1/8842/2010, dated: 04.12.2010 from the Commissioner of Labour, Andhra Pradesh.

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ORDER:

The following notification will be published in the Andhra Pradesh Gazette.

NOTIFICATION

In exercise of the powers conferred by sub-section (1) of Section 15 read with Section 4A of the Payment of Gratuity Act, 1972 (Act No.39 of 1972), the Government of Andhra Pradesh hereby make the following Rules:

Short title and

Commencement

1. (i) These rules may be called the Andhra Pradesh Compulsory Gratuity Insurance Rules, 2011.

(ii) They shall come into force at once.

Obtaining

Insurance

for payment

of Gratuity:-

2. Every employer other than an employer of an establishment belonging to, or under the control of, the Central Government or a State Government, shall subject to provisions of sub section (2) under section 4A of the Act, obtain an insurance in the manner prescribed under sub-section (4) of section 4A of the Act for his liability for payment towards the gratuity under this Act, from the Life Insurance Corporation of India or any other Insurance Company incorporated under the Company’s Act, 1950.

Recovery of

the amount

of Gratuity:-

3. (i) The Controlling Authority appointed under section 3 of the Act is authorized to recover the amount of the Gratuity payable to an employee, as decided by the employer under sub-section (2) of section 7 of the Act or in case of a dispute, as decided by the Controlling Authority under subsection

(4) of section 7 of the Act, from the Life Insurance Corporation of India or any other Insurance Company with whom an Insurance has been taken under sub-section (1) of section 4A of the Act or as the case may be, the Board of Trustees of the “Approved Gratuity Fund” constituted in accordance with sub-section (5) of section 2 of the Income Tax Act, 1961 and

(ii) Such board of trustees should include equal number of representatives of the employer and the employees of the establishments.

4. (i) Every employer of an establishment covered by the Act shall get his establishment registered with the Controlling Authority of the area in Form-I, within 30 days from the notification of the compulsory insurance provided under section 4A of the Act, along with details of employees of the establishment, to be furnished in Form-III:

ii) Every employer shall furnish the details of the employees insured, to the controlling authority in Form-III at the time of registration of the establishment with the controlling authority and thereafter whenever there is a change in the employees insured.

Continuing

approved

Gratuity Fund:-

5. Every employer of an establishment covered under the Act, who had already established an Approved Gratuity Fund in respect of his employees and who desires to continue such arrangement, and every employer employing 500 or more persons who establishes an Approved Gratuity Fund in accordance with sub-section (5) of section 2 of the IncomeTax Act, 1961 may opt to continue / adopt such arrangement by submitting an option in Form-II, provided such existing Approved Gratuity Fund covers the entire liability of all the employees of the establishment, under the Act.

Relevant extracts on the ‘Compulsory Insurance’ from the Payment of Gratuity Act, 1972 is as follows-

Section: 4A Compulsory insurance

(1) With effect from such date as may be notified by the appropriate Government in this behalf, every employer, other than an employer or an establishment belonging to, or under the control of, the Central Government or a State Government, shall, subject to the provisions of sub-section (2), obtain an insurance in the manner prescribed, for his liability for payment towards the gratuity under this Act, from the Life Insurance Corporation of India established under the Life Insurance Corporation of India Act, 1956 (31 of 1956) or any other prescribed insurer:

Provided that different dates may be appointed for different establishments or class of establishments or for different areas.

(2) The appropriate Government may, subject to such conditions as may be prescribed, exempt every employer who had already established an approved gratuity fund in respect of his employees and who desires to continue such arrangement and every employer employing five hundred or more persons who establishes an approved gratuity fund in the manner prescribed from the provisions of sub-section (1).

(3) For the purpose of effectively implementing the provisions of this section, every employer shall within such time as may be prescribed get his establishment registered with the controlling authority in the prescribed manner and no employer shall be registered under the provisions of this section unless he has taken an insurance referred to in sub-section (1) or has established an approved gratuity fund referred to in sub-section (2).

(4) The appropriate Government may, by notification, make rules to give effect to the provisions of this section and such rules may provide for the composition of the Board of Trustees of the approved gratuity fund and for the recovery by the controlling authority of the amount of the gratuity payable to an employee from the Life Insurance Corporation of India or any other insurer with whom an insurance has been taken under sub-section (1), or as the case may be, the Board of Trustees of the approved gratuity fund.

(5) Where an employer fails to make any payment by way of premium to the insurance referred to in sub-section (1) or by way of ‘contribution to all approved gratuity fund referred to in sub-section (2), he shall be liable to pay the amount of gratuity due under this Act (including interest, if any, for delayed payments) forthwith to the controlling authority.

(6) Whoever contravenes the provisions of sub-section (5) shall be punishable with fine which may extend to ten thousand rupees and in the case of a continuing offence with a further fine which may extend to one thousand rupees for each day during which the offence continues.

Explanation : In this section “approved gratuity fund” shall have the same meaning as in clause (5) of section 2 of the Income-tax Act, 1961 (43 of 1961)].